In my column about bailing out the poor, I mentioned (rather casually) that the financial crisis was inextricably linked with our perceptions about race. Some commenters thought I was full of it and that I was trying, yet again, to make EVERYTHING about race. Well, I wouldn’t have such an easy time doing this if it weren’t actually true. Particularly, I want to emphasize that a subset of Republicans are attempting to blame African-Americans and Latinos for acting “greedy” and assuming the risk of a sub-prime loan. Case in point- Rep. Michele Bachman recently stated that minorities were the key downfall for the housing market. How so? Well, in 1977, the Community Reinvestment Act (CRA) was signed into law by Pres. Jimmy Carter. The act required financial institutions to provide loans for low-income individuals, so that they too could have a share of the American dream. Now, very conveniently, Republicans are blaming liberals, and those low income folks, for the current economic crisis we’re in. Of course. This has absolutely nothing to do with predatory lending, decreased regulation or a totally incompetent and disastrous administration. Remind me again why Republicans are called the party of personal responsibility.
Michelle Malkin reliably goes one step further- blame those illegal immigrants. Really, is there nothing that this hateful woman cannot connect to brown people? In her characteristic rant, Malkin documents what she terms the “illegal alien home loan racket.” Specifically, she claims that nearly half of the loans to Hispanics were sub-prime loans and that a quarter of these loans are currently in default. Not surpisingly, she’s wrong on both counts. Hispanics actually received 20% of sub-prime loans and in fact, 39% of these loans were taken out by affluent borrowers, those with an annual income at least 120% of their given area’s median income. But, we all know that reality has a well-known liberal bias.
It is really amusing to note the frantic attempts by Republicans to rewrite these last 8 years. And there is a discernible pattern here. Republicans will go so far as to admit that mistakes were made, like in Iraq or the housing crisis. However, they will absolutely NOT take credit for these mistakes. Indeed, these people would rather pin the blame on those ungrateful Iraqis, the liberal media, defeatist Democrats and greedy minorities than own up the fact that conservatism just doesn’t work.
Note: A great response to these ridiculous Republican claims can be found here. Incidentally, one of my former bosses, Robert Litan, is quoted in the article as agreeing with the Republican assessment of the CRA. Sigh.
Cross-posted here.
-Indira
2 responses so far ↓
Mike // September 29, 2008 at 12:42 am |
As far as I understand the current data, the CRA shouldn’t be defended on that it’s not relevant to the housing crisis but on the fact that it is still a success and may have dampened some of the ugliest parts of the housing debacle of the past 7 years.
http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf
What the CRA-aligned banks and the fly-by-night shadow banking industry were up to were completely different things. The CRA actually held the high-risk loans it originated; the shadow banks sold them off to Wall Street to be turned into security instruments. They were subject to a huge amount of moral hazard in lending since they had no reason to care if the loans got repaid – the banks lending under CRA didn’t have that luxury.
Indira // September 29, 2008 at 8:59 pm |
Apologies, Mike, but I was only able to make it to the fourth page of that Traiger report. They lost me after the discussion on loan market share. So, I’ll just rely on your summary (parts of which I don’t understand but that’s my fault…I haven’t taken econ in a while).